Consumer confidence deteriorated sharply in the second quarter of 2026 as Filipino households grew increasingly concerned about rising food and fuel prices stemming from the Middle East conflict, along with expectations of higher unemployment and a weaker peso.

The Bangko Sentral ng Pilipinas’ latest Consumer Expectations Survey showed confidence weakened across all reference periods.

The current-quarter Consumer Confidence Index (CI) plunged to -42.0 in the second quarter from -15.8 in the previous quarter. Expectations for the next quarter also turned sharply negative at -16.3, from 1.8 previously, while the 12-month outlook slipped to 0.2 from 9.6.

A negative confidence index indicates that pessimistic households outnumber optimistic ones in their assessment of the country’s economic conditions, family finances, and household income.

Governance-related issues

Aside from concerns over higher food and fuel prices, respondents also cited governance-related issues as weighing on their outlook, likely referring to the ongoing probes into the flood control scandal and tensions in the Senate.

Consumers expect spending on essential goods and services to increase in the coming months but indicated they are less likely to purchase big-ticket items such as motor vehicles and real estate. Households also signaled a lower willingness to borrow or save, reflecting a more cautious approach to managing their finances.

Inflation expectations

Meanwhile, year-ahead inflation expectations remained slightly above the BSP’s 3 percent target but within its 2 to 4 percent target range.

Respondents expect inflation to accelerate mainly because of higher food and utility prices.

The BSP said it continues to closely monitor the impact of the Middle East conflict on domestic inflation and the broader economy. The Consumer Expectations Survey is one of the central bank’s key forward-looking indicators used in formulating monetary policy.